In today’s Austin Business Journal there is news about the first sign of something we knew would eventually happen. The question has been asked “are there enough condo buyers to buy all of these Austin condos scheduled to be built?” The answer I’ve heard from various sources (economists, builders, Realtors who specialize in condos) is “no, there won’t be enough demand, but the developers know that and many of these projects simply won’t be built, or will be postponed”.
That makes sense, but I haven’t actually seen a project get pulled until now.
From the Business Journal article:
Some developers reevaluating area’s booming condo market
In what may be the first sign that all is not well in the booming local condo market, one of the developments slated for South Austin is unlikely to happen as planned.
Sound familiar? I wonder if more may follow.
Avera Residential has pulled The Magnolia, a 139-unit project planned for 3 acres at 1201 S. Lamar Blvd., from its Web site and sources say the project is in limbo. The development firm that’s focused its attention on South Austin residential projects first announced its plans for The Magnolia two years ago and was actively preselling units earlier this year. The company planned to spend more than $35 million on the project.
It’s interesting to me that this is a South Austin project, not a downtown highrise. Demand for housing in South Austin, especially the closer in South Central areas of the 78704 zip code, has been strong and steady for the past couple of years. And the South Lamar area has gained notable popularity during that time, with a lot of retail and residential activity.
The Avera Development website shows 4 other projects in South Austin, two of which are listed as “sold out”. The other two are listed as “pre-selling”. In today’s world of untrustworthy semantics, I don’t know if “Sold Out” means really sold, or perhaps “fully reserved with a waiting list”.
The other question would be, “Sold Out” to whom? Austin developers have been pretty good about limiting investors, but if a lot of these units were put under contract by investors, or buyers with weak loan credentials, the current challenges in the lending market could cause a lot of those buyers to fall off before closing.
For a map and list of the other current South Austin projects being developed by Avera, click here.